26
2016 ANNUAL REPORT
Financial Information
Financial Analysis
Profit and Loss Statement
Given that RECOPE is 100% dependent
on oil and petroleum products, it
is considered a price taker in the
international market. Any variation in
the price of oil, and/or other refined
fuels, directly affects oil consuming
countries. In addition, RECOPE is
regulated at an internal level by the
Public Services Regulatory Authority
(ARESEP as per its Spanish acronym);
the institution that defines the pricing
practices and that determines the sales
prices offered in terminals and fuel
filling stations. Therefore, any decision
made by ARESEP regarding tariff-setting
practices will affect the financial position
of the company.
It is also important to note that, when
carrying out the financial analysis,
compliance with the International
Financial Reporting Standards (IFRS)
must be taken into account. RECOPE was
required, by executive decree, to adopt
the International Financial Reporting
Standards before January 2017; the
IFRS, however, were adopted in 2016.
To that end, a series of adjustments
had to be carried out in 2015. These
adjustments included, among other
things, a revaluation of assets and an
increase in the severance pay provision.
Income and Cost of Sales
Sales revenue totaled $2,157 millions
as at December 2016. This represented
a 6.80% decrease (equal to $157
millions) in relation to 2015, in which
sales rose to $2,314 millons. This
decline occurred, on the one hand, due
to a drop in the international price of
fuel, which directly affected the prices
set by ARESEP; and, on the other hand,
due to delays caused by the changes in
pricing practices, which were approved
by ARESEP in December 2015.
Whereas sales (in liters) as at December
2016 rose to 3,263,072,075, sales as at
December 2015 totaled 3,023,880,487
liters. This represented an increase of
239,191,588 liters or, in percentage
terms, 7.33%. From this it can be
deduced that, since fuel prices dropped
